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In our last two newsletters (see here and here), we discussed how to hire the perfect employee, but despite all our good intentions, sometimes the day comes when we have to fire an employee. (Insert Gasp and sigh of dread here) If you speak to most business owners, they’ll most likely say firing employees is one of the hardest tasks that falls on their plate. In fact, the average employer waits way too long to fire a non-performing employee because they are dreading the task, although retaining them is costing them money, time and even customers in the long run. Which is why dreadful or not, firing is a necessary evil in business and should never be avoided.

However, keep in mind that just like hiring the perfect employee is a process, firing the not so perfect employee is a process as well. But since there are laws that govern who you may or may not fire and what you may or may not be allowed to fire for, firing someone can actually be a lot more complicated than hiring them. So what do you need to know before firing someone in your organization?

#1 Weigh your Options

Like our discussion with hiring, the first step is to consider if you really need to fire this employee. Realize that not all employees are suited for every position. Before firing someone, consider whether perhaps they would be better fit at a different job within your company. Obviously this is only if the employee has done nothing wrong and exhibits great qualities and work ethic, but is sinking at their current position. Sometimes the difference between an amazing employee and an employee you are rearing to fire is TRAINING, TRAINING and more TRAINING (refer back to my second newsletter on hiring practices to see just how important training is). It may be that the employee you are considering firing, just needs some additional training and/or development. Offering them that training or development can gain you the perfect employee. And not to toot the PEO horn once again, but PEOs often offer this training and courses to employees of their clients.

#2 Protect Yourself and Company

If you’re in the legal right to fire the employee (again, a PEO provider can assist in determining whether this is the case or not) you want to leave no room for a fraudulent case.

Only fire someone face-to-face! Besides being courteous to your former employee, face-to-face leaves no room for miscommunication.

Do not fire anyone without warning! Again, it’s a simple courtesy, but also, a warning legitimizes your claim against the employee. If you’ve told them already you’re not happy with their performance, they shouldn’t be surprised to be fired when they don’t improve. Also, no one wants to work in an environment where firings happen out of the blue. It just creates an environment of fear and distrust among your remaining employees.

As a follow-up to #2 above, DOCUMENT, DOCUMENT, DOCUMENT! (I don’t need to tell you what it means when I repeat myself three times, you know already that it just indicates how important this advice is. And IT IS! So don’t ignore it.) So what to document? Everything!! Okay not clear enough, here are some examples of important things to have records of:

How well or un-well (isn’t that the antonym of well?) they performed their job. If someone is excelling write down….not so much so, write that down as well.

Any infraction they did with time, place, details and witnesses names if applicable.

Any disciplinary action that was taken at the time of each infraction

The amount of time given to rectify the situation

Any warnings given before disciplinary action was taken. Make sure to record each time a warning was issued and by default each time said warning was ignored.

As with any other types of documentation, have concrete proof of everything. And if something was relayed verbally, follow it up with an email so you have written proof of all interactions.

Don’t fire an employee without a witness! The reason for this one should be obvious. If you have someone who is there to attest to your reason and method of firing, it is harder for someone to make a claim of employment discrimination.

Protect your property and data. Terminate the employee’s access to all your systems immediately and change any passwords you may have, and don’t allow them to access their work area. Ask the employee to hand over their key, door pass, badge and any electronic equipment that is company owned, i.e., smartphone, laptop, tablet etc.

Keep it short and simple! The more information you give, the more fuel they have to fight you. If you’ve given them the proper warnings (see #2), then they know why they are getting fired and there’s no need to rehash it. Honestly, it might just be cruel to do so.

Don’t end the meeting on a low note! Sounds like odd advice for a termination meeting, but the reality of the situation is no one wants a disgruntled former employee (especially in the world of social media). If the firing is done respectfully, you are accommodating and acknowledge the employee’s positive attributes, you are more likely to have an employee who won’t bash you on social media or TP your house. Unless they’ve truly been awful, don’t deny them unemployment benefits and encourage them in their next steps towards employment. If applicable, you can even offer to be a reference for their next job. If you are able to and if the situation warrants it, offer a compensation package. Basically, be nice and you’ll make a very hard situation a bit easier (although, I’m not promising that there still won’t be tears, because unfortunately, most likely there will be tears!)

#3 Be Prepared

Like we mentioned above, some classes of workers are protected based on race, color, religion, national origin, gender, disability….you get the point. Therefore, when you are firing anyone, especially someone who falls in these protected classes, make sure you have a clear reason why you are firing them and have documentation. Don’t wait until an employee becomes a problem to begin documenting. Have a clearly defined method of tracking and documenting employee performance, establish uniform policies on what is expected and what is a fire-worthy offense, and if possible, discuss and correct problems as soon as they occur. If you’re really not sure if you have a leg to stand on, reach out to a professional (just saying, your PEO can most likely help you with this).

#4 Interview, Interview & Interview

And, no I’m not talking about hiring the replacement for your fired employee just yet (that we covered in our last newsletters), but I’m actually referring to Exit Interviews. All too often, this important step is skipped, but they are a valuable tool for any business owner. They can help bring to light issues within your company. After all, a fired employee has nothing left to lose, so they’ll be as blunt as possible and everyone needs to hear the blunt truth every once in a while. Now obviously, if your employee is leaving on bad terms and has a “burn the company down to the ground” mentality, you may want to take what they have to say with a heaping tablespoon of salt. But otherwise, be open to the criticism and see how you can improve both the work environment for your current employees, and implement ideas to attract better new hires. This step holds true whether you are firing someone or they are quitting.

#5 Be Transparent

There’s nothing that strikes fear more in employees’ hearts than hearing that a colleague was fired! Unless you want to run a company on fear (trust me, you don’t – it’s not really the motivator you think it is), be open with your remaining employees about the circumstances of the firing. You don’t have to share the intimate details, but recognize that a change has been made to the staff and assure them that their jobs are still safe (unless they’re not, and if that’s case, go back to #1 and repeat).

Obviously, the best option is to not have to fire at all, but when you do, keeping these points in mind can definitely make the process a lot easier, smoother and minimize your stress, dread and fear.

Want to find out how a PEO can help you attract and retain quality employees or how they can help you with your HR administrative tasks so that both hiring and firing can be easier? Contact ARC Consultants today.

In our last newsletter, we discussed the first two steps of hiring the ideal employee for your company (here’s a quick refresher if you want to review those steps). In this week’s article we get to the meat and potatoes of the hiring process, and explore how to ask the right questions to potential hires and how to ensure the best candidate for the job becomes the best employee for your business. Because as you will soon discover, hiring the dream employee goes beyond the hiring process. Just read on to see how…

Step 3: Ask the right questions & offer the right incentives

This is really two separate parts of the same process: one is making sure your interviewees put their best foot forward, while the second is making sure you put yours forward.

Knowing what to ask potential hires is essential to the interview process.

Rule #1: YOU SHOULD NOT BE ASKING THEM ANYTHING THAT YOU CAN READ OFF THEIR RESUME! The interview is not about learning about their experience, education, etc., but instead it is a way of gauging their personality, work ethic and character and seeing how they will fit in your company’s current workforce and culture. In addition, don’t just ask about their expertise, but provide a hypothetical scenario in which they apply that expertise to a company related problem or situation.

Rule #2 is therefore, GET CREATIVE WITH YOUR QUESTIONS.

Some creative questions can include (but then again, you SHOULD try to come up of some of your own that fit your company needs best):

Turn the question back on them and ask them, “What question didn’t I ask that I should have?” Their answer will reflect a lot about what they feel is important; what they are more and less confident in and may dig up a nugget of information you never would have dreamed about asking.

What would you do if you were CEO? Again, this reveals a confidence level and allows you to see if the hire is more comfortable in a leadership or follower role.

Why wouldn’t you want to work here? They’ve got the “why I want to work here,” answer down pat, so reverse the script and ask them why they wouldn’t want to work here. This is the candidate’s opportunity to show that they have a great understanding for the business, but also that they recognize that no opportunity is perfect – but that they have solutions for coping with those obstacles.

Have fun with your questions: What super power would you most want? If you can have lunch with one historical figure, who would it be? In general, interviews should be a conversation rather than question and answer, so anything that opens an avenue of discussion is a great question to ask.

As for putting your best foot forward, make sure you are offering an attractive benefit package (a PEO can help you compete with the big dogs for this), a competitive salary and potential for growth. Having top employees requires competing for those employees, so make sure you’re in the game. Like your interview questions, get creative for ways to entice potential employees. A froyo machine in the break room isn’t sealing the deal, but it certainly doesn’t hurt and lets hires know that you’re a company that cares about the happiness of your employees (now that’s a win-win).

Step 4: it’s not always about the hiring process.

Hooray! You finally hired the employee of your dreams! Now what?

Guess what, hiring the right employee is just the first step (or I guess according to this article, the third step) to having the perfect employee. And it’s not even the most important step– this final step is probably the most important step in the process and can make the difference between having an Employee Stud versus an Employee Dud. So what is this all important step?

TRAINING! TRAINING! & MORE TRAINING!

There, it’s so important I said it three times. There are no two-ways about it, good employees no matter their education, background, experience or super powers, need to be trained in working for YOU.

To drop them in the deep-end of office management may very well show you how adaptive, self-sufficient and innovative your new employee is, but it really isn’t the most efficient way to getting the job done. Take the time to properly train your employees and keep them well informed about company changes, policies and what’s happening in the office. Trust us that extra time you take will definitely pay for itself in the end.

Some of the things that you should make the time to tell ANY new employee are:

Your USP (unique selling point) and how you compare to your competition. Every employee is a potential networking and sales person for you. That oh, so innocent question, “Oh, you work at So & So Inc. — are they any good at what they do?” can actually lead to a new customer/client. Not having the correct information to deliver an elevator pitch, may mean the difference of a new client or not.

How to Solve a Customer Problem on their own. You’ve (or your employees have) been there and done that, so you really know most of the clients’ problems, although you must never underestimate the power of clients coming up with unique and crazy problems, but on the most part, you or someone on your team should know how to handle most complaints and issues. Give new employees the resources, the skills and the AUTHORITY to handle these problems instead of having to pass the buck to upper management when problems arise.

It may also be worthwhile to assign a buddy/mentor for every newcomer. In this way, new employees have an address for their myriads of questions and they need not to feel like they are bothering management or feel stupid in asking questions. In addition, building a trustworthy relationship with someone with more experience in that company can help guide the newcomer and allow them to adapt and grow as part of the team.

Through following these (albeit not simple but essential) steps you can ensure that you hire the best employee for your company and needs. Now if you think hiring someone is the hardest part of being a boss, just wait until you have to fire someone. Look out for tips on that in a future newsletter article.

Need help with your HR administration or need more tips about the hiring/firing process, contact ARC Consultants to see how a PEO can help you with all your HR needs.

Good employees are hard to find….or are they? While business owners, often lament the inability to find good staff, in truth, it may very well be their fault! The reality is that finding and hiring the right employee for your business is no easy task. But knowing what to look for in a candidate and what to ask is essential to making sure you’re getting an employee that is right for your job, fits in with your company culture (see our article on that here), and is, simply put, a GREAT (not just good) employee.

Too good to be true?

It doesn’t have to be. Here are the 4 steps you need to take in order to hire the perfect employee for your company.

Step 1: Clearly define your position

It’s important to know this step applies to EVERYONE thinking of hiring a new employee. It’s not just enough to say, “I’m looking for a new customer service rep, sales manager, ice cream tester…” or whatever position you want to fill. Before you begin the hiring process you need to have in your head clearly what this job entails.

So how do you clearly define your position?

Define your company – Answer what the purpose of your company is, not what you make or sell, but the greater good you provide. Nike for example, doesn’t they sell shoes and sporting apparel but instead state: “[We] inspire athletes of all abilities to tap into their potential.” This is especially important because research shows applicants, especially Millennials, are more attracted to positions that have a greater purpose. Gone are the days of soulless corporations; people want to feel that their days are being spent in a meaningful way. In addition, defining your company allows you to define what kind of applicant you’re looking for. Which, lucky for you, is the next step.

Define the applicant – Don’t just state the requirements of a job, or the necessary skills, experience and knowledge required to fill the position, but figure out your ideal applicant; creative freethinker vs. analytical and by-the-books? Marvel lists the qualities they are looking for by stating “You are” instead of “You have/know” such as, “you are a walking wiki on anything Marvel.” And you had better believe, you won’t find anything about years of experience or Microsoft Office in their job postings. So get creative with how you recruit, (for some great examples check out some of these recruitment ads here.), but while you’re getting creative don’t forget the final step in defining your position….

Actually defining your position – Let potential applicants know exactly what the job entails, the company goals, the required day-to-day activities, what is expected of them and how success will be measured. Finally, let applicants know their potential of growth in the company with this position. Applicants are always looking towards the future. Telling them right up front where they can go in this position can definitely help attract a qualified employee that is bound to stick with the company.

If all that sounds a little too overwhelming for just step 1, don’t worry, it gets easier from here, but more importantly, if you’re partnered with a PEO, their HR experts can help you determine and define all these aspects of the hiring process so you can quickly move onto step 2.

Step 2: Determine if you really need to hire someone for this position

I know this piece of advice sounds counterintuitive to be included in an article about finding and hiring employees, but realistically sometimes it is just more worthwhile to outsource the task than to hire someone in-house. Prime example: partnering with a PEO to handle your HR administrative tasks, rather than hiring a HR manager. (For more about the pitfalls of developing an internal HR department, read here).

Answer the following questions to determine which direction is better for you.

Is the employee being hired to provide your primary service or a supplementary service, such as administrative tasks?

If it is the former, hire in-house; the latter, it may be worthwhile to outsource. Even more so, if this service gives you a competitive edge, you want to make sure that you are fully in control of the outcome and therefore may want to hire someone rather than outsource.

How frequently do you need the services provided by the employee?

If the services are ongoing (even those that are supplementary) then it may be worthwhile to hire, not so frequently needed, then outsource it. There’s nothing worse than hiring someone who doesn’t have enough work to fill their days

Is the service a commodity that is regularly outsourced and therefore done much more efficiently through outsourcing, such as using a payroll service?

If so, then why are you wasting your time? These providers have figured out how to do this task quicker, better and more cost efficient already. There’s no need for you to reinvent the wheel.

Is it a specialized service that requires tons of training and education?

Hiring highly specialized people to work for you can be quite expensive, but today’s technology has made available a plethora of highly specialized talent and easy methods of data sharing for streamlined out-of-house work, so why wouldn’t you take advantage without paying out big bucks?

Does the service need to be carefully monitored, allow access to sensitive company information and/or require a high level of trust in the provider?

If so, it may be better to hire someone in-house. Of course, I’m not saying that independent contractors are not completely trustworthy. You never need to worry about your sensitive data when outsourcing with a reputable provider. The key word there is reputable, make sure to always get references and actually follow up with those references when using any outsourcing provider. If you’re choosing to outsource your HR tasks through partnering with a PEO, using a PEO consultant or broker to find the right PEO is a great way to ensure that you are using a trustworthy company. That said, hiring an employee for a task that is uber-sensitive, (like guarding the secret recipe to your world famous cookies, for example) is often a better choice as employees create an incomparable loyalty towards the company.

A final note about outsourcing, if you are going to use independent subcontractors, it is important to research your insurance’s coverage in regards to these professionals and insure that they are also covered by your policy. If your insurance is through a PEO partnership, your PEO broker/ PEO consultant should be able to help you answer this question.

So now that you’ve defined your position precisely and determined definitively (a little alliteration just for the fun of it) that you need to hire someone, you’re probably even more convinced than ever that the perfect candidate is non-existent. But fear not, the next two steps will help you hone your interviewing skills so that among all the prospective applicants you pick exactly the right one for the job and your company.

You ask, what are the next two steps? We’ll for that you’ll just have to wait until my next newsletter.

Simply can’t wait? Contact ARC Consultants today to find out how partnering with a PEO can actually help you with the entire hiring (and firing) process.

With New Year’s just past (Do we all remember Y2K pandemonium? Can you believe it was 18 years ago?), it’s time to reflect on those resolutions. For many that means personal resolutions. But believe it or not, New Year’s is also a good time for business resolutions, especially if your business is showing any of the following seven signs. And with the help of ARC, this is a resolution you can actually keep.

So what are the 7 signs you might need a PEO?

Read on and see if any sound familiar.

#1: Your administrative duties overwhelm you

If you’re desperately searching for more hours in the day to get through your entire workload, a PEO is the ideal solution for you. A thriving, growing business translates into growing administrative duties that you may not be able to keep up with.

A competent PEO will streamline all of your administrative processes, such as overseeing payroll, new hire and termination processes, HR compliance and medical coverage for your employees. They assume the bulk of hiring and recruiting new workers, supervise employee data management and more.

This might especially apply to you if: You have multiple locations, recently underwent an expansion, or experienced a large growth surge.

#2: You’re not 100% certain you are compliant with regulations and laws related to your industry

Running a lawful business has never been more complicated. New rules and regulations are constantly being passed, and just keeping yourself and your business updated with these laws can consume most of your time and energy.

Free up your brain space and drive for the things that really matter – like launching a new line of products or expanding your clientele beyond its current base – by outsourcing this tedious task to a PEO. They’ll do the hard work for you and ensure that your business is always fully compliant with all relevant laws.

This might especially apply to you if: Your industry is high-risk and is governed by many complicated rules and regulations.

#3: You want access to a Fortune 500 benefit employee benefit package

Small businesses sometimes have to resort to hiring less-than-ideal candidates because they don’t have access to the handsome benefits package offered by larger firms. In an employee’s market, job-hunters can afford to be choosy and might not even give your business a chance if you can’t offer an attractive package.

By using the services of a PEO, you’ll have access to a much wider pool of benefits you’d otherwise never be able to reach. This way, you can give your employees what they really deserve.

While this is true with all employee benefits, it’s especially true with regards to medical coverage. A smaller business is often stuck with less-than-ideal coverage at ridiculously high premiums.

This might especially apply to you if: You are a smaller company but have exorbitantly high premiums and/or deductibles.

#4: You’ve outgrown your current administrative system but don’t yet have the financial resources to build an internal HR department

Your business used to run perfectly well with its current administrative practice, but now it’s outgrown itself. You might be entertaining the thought of building an internal HR department and are wondering what this might run you in costs.

While the exact price tag varies with need, establishing an HR department is always time-consuming and relatively expensive. It can mean recruiting and hiring an HR director, using the services of a payroll company, and paying host of cost and fees that can be incurred by doing your HR in-house – all of which can total up to $200,000!

Do you stick with the system you have in place even though it’s not working too well or drop a ton of money on establishing an HR department?

You might think you’re stuck between a rock and a hard place, but there’s a simple solution: Hire a PEO! You’ll outsource all of your HR and you’ll have a greater depth and breadth of services at a reasonable price.

This might especially apply to you if: You’ve already experienced the fallout of administrative practices that aren’t sufficient for your current level of growth.

#5: You recently acquired a company

Acquiring another company is an exciting step for growing businesses and opens a plethora of new opportunities. Unfortunately, though, this process often leads to the realization that the current HR process was undermanaged or insufficient for the business’s needs. This can present a significant risk to acquirers, particularly in a stock purchase. You don’t want to end up losing out on the acquisition because of faulty administrative practices. By using a PEO, your HR will be handled efficiently and competently, removing all the employer risk inherent in an acquisition.

This might especially apply to you if: Your administrative process was already floundering prior to the acquisition.

#6: You’ve just lost a long-time employee who handled all aspects of HR

Every business owner likes to think their best employees will stick around forever, but this is hardly true. Employees leave their places of work all the time – even ones they’ve worked in for decades. If you have an employee you depend on to manage HR, you might be lost if this worker leaves your company. It’s best to have a PEO working together with your employee so that you’re not up a creek if this key worker leaves.

If the inevitable happens and you did not employ the services of a PEO before it did, it’s not too late to start now. A PEO can swoop in and save the day when you feel like you’re completely lost without your key employee managing HR.

This might especially apply to you if: You’ve never played any part in the HR department at your business.

Every business does it best to keep its employees safe, but understandably some work environments provide higher risk to their employees than others. When you are in an industry that has higher risks to your employees, the cost of your workers comp insurance can be quite high.

Because PEO’s are shopping for this insurance in higher quantities they can provide better rates on workers comp insurance plans. And since the company partnering with the PEO can often take on the EMR (Experience Modification Rate) of the PEO, even those companies with high EMRs can benefit from the PEOs lower rate. In addition, PEOs can provide safety compliance guidance, improving your environment’s risk factors and your personal EMR to qualify your business for lower rates even if taking on the PEOs EMR is not an option. So essentially a PEO can both make your business a safer place to work and save you money on workers comp insurance. Now what’s not to love about that?

This might especially apply to you if: You are in the construction or manufacturing industries which have high risk environments.

Okay, you have to admit it, at least 2 or 3 of those signs apply to you. If that’s the case, you definitely can benefit from a PEO.

Still not convinced? Contact ARC Consultants today so that they can determine if a PEO is right for you and if so, which PEO is the right partner for your exact business! Now, that’s something to cheer about! Happy New Year to all! Wishing you a stress-less and successful new year.

We’re back (did you miss us?) with more PEO terms demystified! But please take note, when writing up the list of words we wanted included for these two articles, we realized how many industry relevant words their actually are. So don’t see a word that got you stumped here or in our part I of this article (click HERE for a review)? Let us know and we’ll help demystify it for you.

As for now, keep reading for H-Z of the PEO terminology defined.

HIPAA- You’re probably familiar with HIPAA (could they get anymore letters into this acronym or what?), from the pile of papers you are always made to sign when visiting any doctor. But what you may not have known this multi-letter acronym standing for the Health Insurance Portability and Accountability Act can affect you as a business owner, because besides protecting your privacy at the doctor it also protect personal information and data collected and stored in company medical records. You never want your employees’ medical information being compromised.

HRIS- HR has basically gone high-tech! HRIS is an online solution or software used for data entry, data tracking and the information requirements of a business’s HR management, payroll and bookkeeping operations. A HRIS will help your company process open enrollment, hiring and termination of employees, employment documents, benefit elections, and so much more….It’s basically HR at your fingertips, something any business owner can appreciate.

I-9- The result of a hot button topic, the I-9 is a form required by the Immigration and Naturalization Services to verify your employee’s identity and eligibility to work. Your employees cannot be put on payroll until they’ve submitted this form. In simple English: no paper, no pay.

Independent Contractor (1099 worker) – These workers may do work for you but don’t work FOR you, hence the term independent. They are not your employees and therefore, won’t be on your payroll. Because they are not on payroll, they will not have any income tax withheld from their paychecks, hence them also being known as 1099 workers, referring to the form they receive at the end of the year, instead of the good old W2.

Job Description – This is exactly what it sounds like – a description of a Seems simple enough, but don’t it let that fool you. You will need to have a clear specification for this term for all kinds of forms and applications. It should include all responsibilities and obligations, as well as the purpose, scope, and working conditions of an employee’s job, along with the job title and the name of the person to whom the employee reports.

Loss Runs- These are reports provided by your insurance company that document the claim activity on each of your policies. Think of it as your scorecard of how much you could be losing if you weren’t insured.

Medicare Tax – This chunk of tax on every paycheck goes to fund Medicare – the health insurance program designed for people 65 years and older. You may not like it now, but we’re sure you’ll appreciate it at 65!

Onboarding/Implementation/Enrollment- These terms refer to the act of absorbing a new employee into your company. It includes all training, guidance, orientation, and the entire learning process involved in the employee’s new position.

Open Enrollment- This is the only time of year for individuals to add, reduce or change health insurance coverage without any qualifying events (see the definition of Qualifying Event below). Insurance rates will also usually change at this point.

OSHA- You probably think of OSHA as the people who come in to clean up the mess after any disaster, but in reality the Occupational Safety and Health Administration is a division of the DOL and was created to prevent all work-related injuries, illnesses, and death through enforced workplace safety rules. Gotta keep those workers safe at all cost!

Performance Management- This is the ongoing process of communication between a supervisor and an employee throughout the year. It helps keep employees in line with the company’s goals and vision, and it helps to keep you in touch with your workers. You can benefit greatly in this task by either partnering with a PEO which can provide performance management and crucial review technology. Alternatively, you can invest in a system that can do this for you, but then, you wouldn’t get all the other great advantages of a PEO, of course.

PTO- Paid Time Off is a policy that combines vacation and sick leave in one option. It basically gives your employees the choice of spending their days off nursing a cold or nursing a fruity umbrella drink while vacationing in Aruba. Again, a PEO’s HR representative can assist you in implementing your PTO and advising you on the best practices.

Qualifying Event- any change in an employee’s personal life that can impact their eligibility or their dependent’s eligibility for benefits outside of the open enrollment period (see the definition for open enrollment two words up). This can include loss of health insurance for any reasons BESIDES not paying your premiums or any other voluntarily termination of benefits, change in household size (i.e., marriage, divorce, birth, adoption, of death), moving locations or changing or eligibility status.

Recruiting- You know what recruiting is – it means looking for the best candidate for a job. It includes analyzing the job requirements, working to attract employees, screening applicants, and then finally hiring new employees and training them in for their new role. What you may not know however, is that your PEO can actually help you with this.

Social Security Tax- This tax funds social security benefits. The social security program is the government’s way of skimming off paychecks during the working years, and then putting that money back in the tax-payer’s pockets when they need it during their golden years. Again you may not like it now….but hopefully if the program is still around, you’ll enjoy it during your golden years.

SUTA- The State Unemployment Tax Authority is a state tax paid by the employer to fund unemployment benefits. Your SUTA rate will be based on your business’ overall claims experience.

Tax Restart – A tax restart is kind of like setting back the clock. It happens when an employer is required to restart paying taxes mid-tax year, even though they’ve already made contributions for Social Security, Unemployment and more. Government regulations requires this when a new tax ID number is used under which wages and taxes are being filed. It can be a huge headache, but with a PEO handling the logistics, it’s just a mild annoyance. Plus partnering with a CPEO (see our article on that HERE) can actually the headache all together.

Time and Attendance Systems- Also called TNA, time and attendance systems track and monitor the hours an employee begins and stops working. It lets you see who’s always slipping in twenty minutes late and who’s clocking out early every Wednesday. It can even help you cut costs incurred by overpaying employees for hours they don’t work. A TNA can be an old-fashioned timeclock or, any of the numerous apps or software programs designed for just this purpose.

Unemployment Claims Administration – All administrative tasks involved in unemployment claims. A PEO will take care of all that tedious paperwork and will help you protest the claims whenever possible. Because that’s just what they do….make your job easier and save you money.

Voluntary Benefits – Benefits that the employee elects to pay for on their own. Of course, while typically the employee pays for these benefits, the company will still need to full the administrative role which can be a huge HR burden. With a PEO, the PEO administers all the voluntary benefits relieving you from yet another HR burden. Plus, these benefits allow you to offer a more attractive package which in turn allows you to attract and retain top talent for your organization without putting a big dent in your budget.

Childcare FSA- This account also lets employees use tax-exempt funds for extra expenses. In this case, the money is used for childcare costs the employee incurs while at work, or for adult daycare expenses for elderly family members who live in their home.

Commuter benefits– Hate your commute? Guess what so do most people but at least commuter benefits, AKA qualified transportation fringes, take off a little of the sting of sitting in traffic or hours on the subway. These benefits are basically a pretax benefit that allows employees to put aside pretax dollars to pay for the cost of commuting to and from work even including parking etc. Although like all good things, the IRS does put a limit on these benefits, so a helicopter commute is probably out of the question.

401k- It’s always good to think about the future. With a 401k, an employee can choose to make contributions from his paycheck to a retirement fund.

EAP/Employee Assistance Program- a work-based intervention program designed to help employees resolve personal issues that may be negatively impacting their performance at work.

Added Medical Benefits – while health insurance is great, anyone will tell you that having the extras covered is a huge benefit as well. This can include dental, vision, supplementary health insurance, long (LTD) or short (STD) disability insurance or prescription coverage.

Matters of Law – even the average law abiding citizen can need legal help or protection, and these benefits do exactly that. Whether you need protection against law suits (legalshield), identity theft protection or life insurance to protect the next generation, you can be covered by a voluntary benefit to fit your legal needs.

Employee Perks Program – any other benefits or perks an employee offers. It can include a flexible schedule, paid sick days, performance bonuses, gym membership and anything else your employees would be thrilled to have. I’m thinking a Froyo bar would be a nice addition, no?

W-2 – The W-2 form is a Wage and Tax Statement used in the US tax system to report on wages paid to your employees and on taxes withheld from them. (See Independent Contractor above)

W-4– We know, the tax forms don’t stop coming. The W-4 form is actually for the employer – it tells you exactly how much tax you should withhold from an employee’s paycheck. It bases this info on said employee’s marital status, the number of exemptions and dependents the employee has, and on several other factors.

Worksite Employee – Also called a WSE, a worksite employee is simply what a PEO will call your employees. Because the PEO will become the administrative employer for payroll, taxes and HR purposes, you become the worksite employer, as in the actual employer who is onsite making the day-to-day decisions and still maintaining control of your business. By default, your employees and therefore referred to as WSE’s.

And that’s allllllllllll folks! I guess X,Y and Z are not such popular letters in the PEO world, and we’ve come to the end of our terms with a W. So with that I’ll leave you with one Y word, I’m sure you’ll all understand – YOU!

At the end of the day, you need to do business in a manner that is most effective for you and which makes the most sense to you. Partnering with a PEO can help you tremendously, but if facing the prospect of wading through the confusion of this industry on your own has you more terrified than relieved, that’s where a PEO consultant or broker comes into play. So feel free, memorize this list of relevant terms and definitions or contact ARC Consultants today and let them find the best solution for YOU!

So you’ve finally decided to partner with a PEO or maybe you’ve been partnered for one for years already. I’m sure you’re excited at the prospect of no longer spending hours of precious company time dealing with issues like payroll and other aspects of HR management, and you’re completely excited about the opportunity to outsource the work to the professionals!! After all, you’ve been told numerous times (in these articles alone) that a partnership with a PEO can save you tons of money and hours of work.

And yet…when researching PEOs or interacting with your current PEO, you’re constantly baffled by the terms the companies are throwing around, and it seems like you are spending almost as much time just trying to navigate and decode the PEO world and terminology.

Like anything else in life, when you partner with a PEO, there is definitely a learning curve, which is of course where a PEO broker and consultant comes in handy — they can literally help you skip to the front of the class and answer all your questions. But just in case you want to feel like your PEO is speaking English rather than Chinese to you…here is part one of a comprehensive list of PEO terminology and related words broken down into clear, simple English. (Hey, did you really expect us to get all of them into one article?)

Read on for our comprehensive list of PEO terminology and related words broken down into clear, simple English.

ACA – The Affordable Care Act, more famously known as ObamaCare (although we’re not sure what our current president has to say about that) is a federal law that became effective in 2010, requiring all American citizens to be covered by health insurance. While talks of repealing the ACA has been taking place since Trump took office, the ACA is still firmly in place, so whether you’re a fan of the new administration or you’ve terminated your Twitter account in the last year, it doesn’t make a difference, you and your employees must comply with the ACA or risk being fined.

Admin Fee – An administrative fee or service fee is a monthly fee charged to their clients by the PEO. It can be a fixed dollar amount per employee per month (PEPM) or a percentage of your gross annual payroll.

Administrative Employer – The Employer of Record in a co-employment relationship, in other words, the PEO. This doesn’t mean the PEO has suddenly become your boss, but instead that they will be responsible for all administrative tasks of HR and compliance, including tax payments, payroll processing and more. And like I’ve said before, no need to feel like you are handing over the keys to the castle. You, the PEO client maintains full direction and control of your company.

Ancillary Benefits- Sometimes called Voluntary Benefits. This refers to a secondary health insurance that covers miscellaneous medical expenses such as vision, dental, STD, LTD, Life, Group Life, 401k, FSA, HSA, hospital indemnity plan such as AFLAC or other similar programs; to name a few.

Applicant Tracking System- An applicant tracking system (ATS) is software designed to help an enterprise recruit employees in the most efficient way possible. You can use an ATS to post job openings, screen resumes and schedule interviews with potential employees.

Carve-Out – While carving out is something you do at Thanksgiving Dinner or wood-working class, this term actually refers to a hybrid PEO arrangement where the client company still maintains their own workers’ comp policy instead of obtaining coverage through the PEO’s master policy. This will occur when you simply already have an attractive policy in place, so why would you mess with a good thing? But no worries, the PEO can still assist you with the administrative side of your own policy.

Classification Code – Often referred to as workers comp code or class code. This code allows your policy holder to see how the risk exposure your work has (think dangers of real deep sea fishing vs. the relative safety of fishing for sales leads) and classifies the type of work being performed. The classification code provides an associated code so that premium rates can be established in accordance to the work’s level of risk.

COBRA – No, it’s not about finding a venomous snake in your facilities. The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives qualifying employees and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time. This way, you won’t be leaving your employees without coverage.

COI – A Certificate of Insurance is a document issued by an insurance company that certifies that an insurance policy has been purchased by a specific party. You can’t use this as a substitute for the actual policy, but it is proof that you’ve got insurance. (As if your monthly premiums aren’t proof enough.)

CPEO – If you’ve been reading my newsletters religiously (which of course I’m sure you have been), you should already be familiar with this term from my July newsletter on the topic. But in case you missed that one, here’s a quick rundown. This term is only a few months old. Effective June 1st, 2017, a Certified Professional Employer Organization is one who’s been certified by the IRS. Like everything else the IRS oversees, becoming qualified as a CPEO involves lots of paperwork, applications and a strict background check. And just in case you want to read that original article (for review purposes only of course) you can check it out here.

Dividend – A refund of premiums for workers’ comp policies. How cool is that? It’s almost like getting free money! The refund is paid when the claims of the members on the plan did not exceed the premium payments. Dividends are offered, but not guaranteed, by some PEOs.

DOL– The U.S. Department of Labor; (some of you may know them as Big Brother, because the DOL is always watching). In reality, the DOL is there to promote the welfare of job seekers, wage earners, and retirees by improving their working conditions, advancing their opportunities for profitable employment, protecting their benefits, and helping employers find workers. The DOL also protects workers’ rights to safe working conditions; a minimum hourly wage and overtime pay; freedom from employment discrimination; unemployment insurance; and other income support. What you have to know: treat your workers well and the DOL won’t be a problem for you.

EEOC – The Equal Employment Opportunity Commission is a federal agency charged with ending employment discrimination in the United States. The EEOC can bring lawsuits against private employers on behalf of alleged discrimination victims. So make sure you always hire fairly!

Emod –“Experience modifier” is a rate modifier used by the NCCI (National Council for Compensation Insurance) to define the risk of a particular employer. Obviously, the guy who cleans skyscraper windows will have a higher risk than the one who changes the paper in your copy machine.

Employee Census – Don’t worry; this isn’t a bunch of CEOs knocking on random doors and asking intrusive questions. Rather, it’s a report prepared by an employer that provides the insurance companies the necessary data for the underwriters to determine insurance and benefit rates. In addition an Employee Census may also help ensure that a company’s retirement plan is in compliance with Department of Labor laws and Internal Revenue Codes.

Employee Handbook – Remember that thick student handbook they gave out in high school? This is kind of the same thing. Sometimes known as an employee manual, staff handbook, or company policy manual, this handbook is distributed to employees and details the company culture, policies, and procedures.

EPLI– Employers Practices Liability Insurance is insurance purchased by an employer to protect himself/herself against errors in willful and accidental employer practices, such as wrongful termination, harassment or other ugly situations that can come back to bite you. This way you’re never at risk of losing a year’s profit on one lawsuit! Thankfully, this is something that is usually included and provided to you as part of the services you get when you sign up to partner with a PEO.

ERISA– The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for most voluntarily established pension and health plans in private industries. You don’t need to fund their retirement cruises, but you do have to give your employees enough to live on in their golden years.

FICA– The Federal Insurance Contributions Act (FICA) tax is a United States payroll tax imposed on both employees and employers to fund Social Security and Medicare. You have to know that money for these programs is coming out of someone’s pockets, and in this case, it’s yours.

FLSA – The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, recordkeeping, and child labor standards for full-time and part-time workers in the private sector and in all levels of government. And while child labor is a thing of the past in the US, many of these other things can be a real problem for a business owner who doesn’t comply.

FMLA – We all think family is important, and thankfully for your employee, the government thinks so too. Covered employers must grant employees up to a total of 12 work weeks of unpaid leave during any 12-month period for one or more of the following reasons: the birth and care of a newborn child; placement with the employee of a son or daughter for adoption or foster care; caring for an immediate family member with a serious health condition; medical leave when the employee is unable to work because of a serious health condition.

FUTA – This one sounds waaaaay cooler as an acronym. The Federal Unemployment Tax Act authorizes the IRS to collect a federal employer tax to fund state workforce agencies as well as half of the cost of extended unemployment benefits.

As the title indicated, this is only Part I of this series…Who knew there were so many relevant terms to the PEO industry? Stay tuned for the continuation of these terms in our next newsletter.

Or can’t wait for the next newsletter and you rather not wade through the confusion alone? Call ARC Consultants and see how we can help clarify the process and navigate PEO partnership for you.

With Labor Day firmly behind us and the end of summer officially marked, employees around the nation have begun yet another year of work. And while some may have anticipated this return to regular schedule with excitement, (including many Moms & Dads), most employees wake up each morning with a sense of dread at the prospect of facing yet another work day. In fact, according to a recent Gallup survey, shockingly, 70% of the US workforce are not happy with their jobs. And this, my friends, is simply too many people who are not productively contributing to their companies to facilitate economic growth. As any good manager or boss will tell you, unhappy employees always equal unproductive employees.

It is clear that being a task master and snapping the whip (figuratively, of course…or at least I hope so), is not the way to get more productive workers. Employee job satisfaction and work happiness rank highest in creating a productive environment and getting the most out of your employees. It is for that reason that EMPLOYEE ENGAGEMENT has become the new buzz word among some of the biggest corporations. In fact, like the apple, check mark and coffee of our last article (click here for a quick review if you missed it), it is some of the biggest firms that rank highest in employee engagement and satisfaction. We’re not going to drop names here (who are we kidding, of course, we’re going to name drop), but you may of heard of some of these companies, i.e., a little website called Facebook and small search engine called Google rank in the top 5 for Employee Engagement.

Surprising? Perhaps not. These are known as some of the coolest places to work at. I mean, just check out their cool office spaces here and here. But what you may find surprising is that these same firms also rank high in the amount of work they demand from their employees and the stress that the work entails. In fact one Google employee’s review of the company was that it is both “the best place [to work] and most demanding.” Similarly many of the Facebook employees in their company review stated both their love for the company and how busy they are at work almost simultaneously. I know it seems contradictory–to love work when having a heavy workload– but guess what, it’s not!

That’s right, the amount of work and stress these employees have does not detract from their job satisfaction and overall happiness at working for these companies. So hard work and high stress can still equal happy employees? Definitely worth exploring, no?

So what are these three companies doing right that you (and apparently 70% of businesses) may not be doing?

According to a poll of their employees, nothing major. However, small changes in how you treat your employees can change the entire atmosphere of your company and create a place where people are happy to return to work.

One Facebook employee summed up Facebook’s attitude towards their employees, simply stating, “You won’t find a place that cares more [than Facebook] about its people.” Now close your eyes and imagine your employees talking about your company like that. If you can’t imagine it, it may be time to make some changes.

You can always take a cue from Facebook and Google whose employee engagement policy includes small perks, such as free lunch and snack to large ones, such as on campus health and dental centers. Some of the benefits listed by employees as reasons they loved working at these companies include:

Amazing maternity and paternity leave. Facebook actually pays out “baby cash” to employees for new births and adoptions.

Excellent compensation that rewards strong performance and fair, well thought out review processes.

Lots of vacation days and paid time off.

Okay, I know exactly what you are all thinking at this point…thanks a lot. Obviously, these companies have the money to allow them to offer such great perks and benefits to their employees, but how am I supposed to be able to do the same for my employees?

I shall insert a shameless plug here. But it simply is true that this is exactly where a PEO can help…and we mean really help! A PEO gives you the resources of a bigger company, so yeah, you can compete with a Facebook or Google….at least in the benefits you can offer. In addition, with HR professionals on staff, your PEO partner can help you work out programs that reward strong employee performance and/or think of extra perks that your specific employees would appreciate. Your PEO’s HR specialist can even help create those fair and well thought out employee reviews that Facebook and Google are so famous for, so that your employees feel appreciated, but better yet, you have a clear picture of how happy, satisfied and productive they are being. Now what’s better than that?

So stop being part of the majority, especially, when in this case, they’ve gotten it, oh, so wrong. Instead, let a PEO help you create an environment that your employees will look forward to coming to work each day.

Want to find out more about how a PEO can help you with your Employee Engagement, contact ARC Consultants for more information.

Okay, if I did my job correctly, you are right now scratching your head and are intrigued by the title of my article. Because what do apples, check-marks and coffee have in common? And further, what in the world can these three things have to do with the business world, my business specifically and even more confounding, PEOs?

However, it’s really quite simple. These three seemingly unrelated items each represent three mega-corporations: Apple, Nike and Starbucks. One of the core things these three corporation hold in common is that these three companies distinguished themselves from the thousands of companies across the country by clearly establishing their company culture.

Think Apple, and you think simplicity, serviceability and quality. The Nike swoosh brings to mind athletic prowess and reaching for impossible goals. Similarly, Starbucks is synonymous with fantastic customer service and even better lattes.

Okay, you’re thinking, you’ve piqued our interest, but you still haven’t answered our more important question, “What do these companies have to do with my company and a partnership with a PEO?”

Again, the answer is simple. Creating your company culture is one of the key components of attracting faithful customers, (ask an Apple user to use an Android, a Nike enthusiast to wear any old sneaker or a Starbucks connoisseur to G-d forbid drink home brewed coffee and you’ll see what I’m talking about). But this culture is not just about retaining your customers. Having a strong company culture is almost as important to retaining your employees as it is to retaining your customers.

Back to our apple, check mark and coffee, all three of these corporations have excelled in retaining their employees, with Apple retaining about 81% of its worldwide employees. Nike was listed as one of the top 100 companies to work for with a mere 9% voluntary turnover rate. Meanwhile, Starbucks has bucked the trend for quick serve restaurants, which usually has a 150-400% turnover rate, with an astounding 65% turnover rate, beating the industry average by 140%.

So, we know now that creating and maintaining a strong company culture can be the key to increased employee productivity across the board. This is because when there is a strong culture attached to your company, employees feel like they belong to something important, and they want to be part of making it better. In turn, your employees will love coming to work when they are part of something bigger than themselves. When employees feel like they fit into a company’s culture, they will develop deeper relationships with their colleagues, be more loyal to the company, and be more productive than ever.

Of course, employers benefit from a strong company culture, too. Having happy, productive employees who are giving their job their all, is one of the best things you can do for your company. In fact, having a winning company culture cannot be overstated. According to a Bain & Company Survey America, 81% of 365 companies throughout Europe, Asia, and North America believe that a company lacking a high-performance culture is doomed to mediocrity.

But again, you’re probably asking yourself, “What in the world does all this have to do with PEOs?”

Elementary, my dear Watson (a change from my normal answer of “It’s simple”). Your company’s culture is the personality you infuse in your company. It defines your office environment, the way your employees feel about their work, and creates your company’s goals. It includes a range of elements, including company mission, values, ethics code, and expectations. And because it fosters a great work environment it increases productivity across the board.

The importance of establishing and maintaining a strong company culture leads many business owners to question if partnering with a PEO or a current PEO partnership will affect their well-established company culture. It is normal to wonder if it’s possible to still maintain the mission, goals, attitude of their company, when their employees are now being dealt with by an outside party.

Worry not, business owners. As I stated in the title, partnering with the right PEO shouldn’t change anything about your company culture. Seems a little too good to be true? Are you having flashbacks to your last co-living arrangement that went south really quickly or your elementary school science project that you “co-worked” on, and thinking co-anything (whether co-living, co-working or co-employment) has to change everything?

Many business owners worry that partnering with a PEO or their existing PEO partnership will make employees feel disenfranchised or set aside or that they will not know who they are working for or what company goals they are working towards.

I repeat, if implemented correctly, joining a PEO or being part of a PEO should change NOTHING about your company’s culture. In fact, handing over all your HR duties to a PEO, allows you to focus more fully on developing and maintaining your company culture. In addition, by utilizing the services of a PEO, you’ll be better equipped at finding the right employees for your business that fit your company’s culture. A PEO can assist you with the tedious recruiting process, including interviewing candidates, resume-screening and performing background checks on prospective employees. A PEO can also help you create, implement and change company policy. And in doing so, PEOs enable you to create a team that personifies your company’s culture.

So what is the SECRET to joining or being part of a PEO, without upsetting your current company culture?

It really is simple this time: KEEP THE LINES OF COMMUNICATION OPEN!

Honesty and transparency are crucial to good company culture, so if you’re considering partnering with a PEO, simply TALK to your employees about this decision. Simple, right?

This lesson can be learned from Zappos, another leader in maintaining a thriving company culture. One of Zappos’s ten core values is “Build open and honest relationships with communication.” Zappo’s founder, Tony Hsieh embodied this value when he announced Amazon’s $850 million acquisition of Zappos in an open letter to all Zappo’s employees in 2009, eliminating the normal panic that ensues when rumors of a corporate takeover begin to circulate.

Let your employees know of your decision to partner with a PEO and why you’ve made this decision. Explain to them the benefits to THEM in bringing the PEO on board, including better benefit packages, access to better health, dental and vision insurance plans, and a safer work environment. In addition, because PEO has access to technology that an average company cannot afford, your work process is made that much easier.

Be upfront about what the PEO will handle and what your company will handle. Most importantly, explain that while you and the PEO are now co-employers, your company is still the one leading your employees and therefore your company still holds the same values as before. A PEO should align with your company’s existing infrastructure to provide complementary expertise– they should not be taking it over.

In fact, if the transition to joining a PEO is handled correctly, working with a PEO can actually improve your company’s culture. After all, happy employees is one of the key elements of having a strong company culture. With the new benefits and the streamlined responsibilities, employees will be glad to know that your company is still looking out for what’s best for them and the company. A PEO consultant/broker and the PEO you choose to partner with should be able to help you complete this transition seamlessly. Communication between your company and the PEO throughout the transition period and the partnership is essential to maintaining your company’s culture in this arrangement. In addition, because PEOs employ seasoned, certified HR professionals who have experience with various industries, these experts can also help in making shifts in company culture, when necessary. This expertise can prove invaluable when structuring, maintaining or changing your company’s culture, and as a partner of the PEO, it’s at your disposal.

So, take the advice of the apple, the check mark and the coffee, and build up your company culture for optimal customer and employee retention, but don’t let this goal stop you from taking advantage of all the benefits a PEO can offer your business. Now, all of a sudden, I’m in the mood of wasting endless hours on my iPhone, running a mile and getting a coffee simultaneously…. I can’t begin to imagine why.

Still not convinced bringing a PEO will not adversely affect your company’s culture? Call ARC Consultants and let them help you partner with a PEO that aligns best with your company’s culture.

Earlier this month, the IRS released a new standard for PEOs — the ability to become a CPEO, or a Certified PEO. With the conferring of this new, coveted title on a handful of existing PEOs, the IRS has given their stamp of approval, acknowledging that these PEOs have met specific standards set forth by the US government. Ok, this is so HUGE, it’s worthy of being repeated – the IRS is giving their STAMP OF APPROVAL to PEOs!

Why am I so excited about this news? Well for one, having the IRS certify select PEOs lends the entire PEO industry credibility. By certifying PEOs the IRS is acknowledging that there is legitimacy to the PEO business model, and that this not some “back alley” concept that is skirting around the law to manage your business’ employee related tasks, obtaining competitive employee benefits, WC insurance and administer payroll taxes and compliance. Instead, the IRS is essentially saying PEOs are a valid and reasonable method to obtain these items and services for your business. Something I’ve been saying all along, but it’s always nice to be backed up by one of the biggest government agencies in the USA.

In addition, having the IRS’s stamp of approval also ensures that these CPEO’s are secure and trustworthy. In fact, to ensure this security for PEO clients, PEOs that wish to become certified, must go through the following processes:

A third party surety bond of a minimum $50,000 or for an amount equal to 5% of the federal employment tax liabilities for the prior year.

Background checks of PEO and controlling persons at the PEO

Present a client service agreement that meets certain IRS standards.

But that’s not all! Besides the newfound security CPEOs will bring to this industry, this news carries with it tax implications for those looking to join or switch PEOs midyear. In the past, a midyear transition often resulted in a restart on your payroll tax calculation. That’s because in the past the IRS didn’t recognize the PEO as a continuation of your current employment status, but rather that all your employees were now employed by another entity; the PEO.

CPEOs now have clear authority to collect and remit federal employment taxes (Social Security, Medicare, Federal Unemployment Taxes, etc.) for the worksite employees and to do so under the EIN of the CPEO. In addition, because the IRS now recognizes the CPEO as a successor employer, a business joining or switching to a PEO midyear will not have their FICA and FUTA wage bases reset. But before you run out to switch midyear, be aware that while this will affect your Federal taxes positively, it will have zero impact on how your state taxes are calculated, and therefore, the state tax implications of signing up for or switching your PEO must still be taken into account.

In added good news, being part of CPEO ensures that special tax credit programs designed for small business clients will still be awarded to clients of the CPEO. This means that your small business will still be viewed as a small business, and will not be denied these tax credits just because you are part of a larger PEO organization.

However, the final cherry on this CPEO cake is that having PEOs certified by the IRS, can help to take some of the guesswork out of choosing a qualified PEO. I repeat can, not will, because while having certified PEOs may be helpful, it is important to realize that not necessarily are they the end all in determining what is the best PEO for you.

Firstly, there are many factors in determining the best PEO, and not necessarily will a CPEO meet your specific business’ needs. Secondly, the PEO industry has had in place already for many years means of keeping tabs on PEOs, ensuring that PEO customers are completely protected and that PEOs are meeting the needs of clients. So even before this news was announced, businesses joining a PEO had other assurances that they were working with either an accredited or at least privately audited PEO.

In fact, the Employer Services Assurance Corporation (ESAC) has been doing exactly that since 1995! ESAC provides accreditation and financial assurance programs for the PEO industry. Their process verifies the PEOs’ ongoing financial solvency and compliance with government regulations and important industry standards. Even more so, ESAC gives more security through underlying surety bonds held on behalf of each ESAC accredited PEO, plus a $15 million excess bond covering all program participants.

But even those PEOs that are neither certified by the IRS nor accredited by ESAC, are often vetted or audited by third parties or privately owned by investment firms, and therefore can be just as reliable, if not more so than a CPEO or ESAC.

After all, becoming a CPEO is a voluntary choice made by the individual PEOs, not a mandatory obligation. Which means while being a CPEO says a lot about that PEO, i.e., there is a standard you must uphold to be certified, (according to the IRS website, “To become and remain certified under the CPEO program, CPEOs must meet tax status, background, experience, business location, financial reporting, bonding and other requirements described in the statute and regulations”), it does not say anything about those organizations that are “just plain old simple” PEOs.

Which begs the question…

What really is the most important letter in this industry? The “C” or the “P”?What is really more important to your business, the certification, i.e., the “C” or the professionalism, i.e., the “P”?

And even more so, what does the presence of CPEOs on the market mean to you? To your business? To the industry? To us as a PEO consulting firm?

But finally and most importantly, which option is really the best choice for you? A CPEO, PEO, ESAC, or some other combination of letters that we haven’t even heard of yet?

Well, I can’t give away all my secrets in one breath. Sorry, but for that answer you’ll just have to give us a call….after all having someone to help you navigate through the alphabet sea of PEOs, CPEOs, ESACs is exactly why using a PEO consultant is so important.

To find out if your PEO is the right fit for your business, or if you should sign up for a PEO, click here or contact one of the ARC Consultants today.

As Memorial Day approaches, we thank those who have lost their lives in service so that we can live and work with freedom and in safety. It is in remembrance of these great men and women that we recognize that these privileges afforded to us by their sacrifice should not be taken for granted. And as employers, we have a duty to ensure that this freedom and safety is being provided to our employees.

Any CEO will attest to the fact that a business’ employees are its biggest asset. Innovative vision and/or superior products or service means nothing if you don’t have the workforce to implement that vision and produce, market and sell that product or service. It’s no wonder then that providing this invaluable asset safe working environments should be our number one priority.

But besides the right of employees to work in a safe environment, providing such an environment just makes business sense. One single work accident can cause a company through both direct and indirect cost upwards of $200,000. And with an average of 3 million workplace injuries reported a year (as per the US Bureau of Labor Statistics), that is a lot of money bleeding from American companies due to unsafe conditions. In the face of those numbers, it is understandable why so many companies are adopting the attitude of “prepare and prevent, rather than repair and repent.”

So how does a company go about preparing and preventing? Some of the safety industry’s top experts weigh in and you won’t be surprised that they all have the same things to say – in order to have a safe work environment you must create a Safety Culture.

What is a Safety Culture, you ask? Judy Agnew, Senior Vice President of Safety Solutions, explains that to truly provide a safe environment, the key rules of safety must be ingrained in the very fabric of the organization. It is created through positive reinforcement of safe behavior, rather than discipline of unsafe behavior, and incorporating safety into every daily decisions, rather than once a year workshops. OSHA VPP, has stated that “strong safety cultures have had the greatest impact on accident reductions of any process.”

Tom Krause, CEO of Behavioral Science Technology, furthers this idea and differentiates between safety leadership vs. safety management. Safety leadership is showing employees why a safety culture is important rather than dictating the safety protocol employees should follow. With safety leadership, employees are much more willing to get behind safety initiatives and protocols. As Krause explains, “If senior leadership gets it right, then the culture will change. If senior management doesn’t get it right, then everything else is like swimming upstream. It’s a struggle.”

Neal M. Leonhard, a manager at Safety Systems, adds to this point and stresses that a management that is committed to safety and encourages employee participation will create a stronger safety culture. Management should provide for and encourage “meaningful employee involvement in the accident prevention system,” he notes. “Employees should be given the opportunity and should be encouraged to provide input into the design and operation of safety processes/programs and the decisions that affect their safety and health.”

Michael S. Deak, corporate director, Safety and Health, Compliance Process Safety and Fire Prevention at DuPont, takes this one step further and states that all companies should make EVERYONE accountable for safety, and he means everyone…from CEO to janitor assistant, all rules should apply equally. Higher management “walking the talk” as he says, is the number one way to get employees to walk the walk.

Donald J. Eckenfelder, a consultant for Profit Protection Consultants, has another take on safety culture. His advice, avoid SAFETY…that is, the word “safety”, at least. He advises companies to not have anything with the word “safety” in it, i.e., safety meetings, safety committees, etc. Instead, integrate safety into your normal business processes. This means there is an overall culture of safety and the responsibility to have a safe environment is shared by everyone rather than a select few.

Deak also feels Safety should not be a priority. He theorizes that as companies’ priorities tend to shift and change as the company grows or due to outside influences, many employees actually do not take these priorities seriously. They adopt the attitude, this too shall pass….Therefore, Deak recommends not making safety a priority, but instead just making it part of the everyday company culture.

A final way to improve your safety culture is to POLICE your safety program. And while obviously, all programs should have some form of oversight, James Kendrick, president of the American Society of Safety Engineers, uses this acronym to indicate the steps every company should take to maintain their safety culture.

Plan

Organize

Lead

Inspect/investigate

Correct

Evaluate

Creating your safety culture is never finished; it is a constant process that involves inspecting and re-inspecting, correcting and re-correcting, evaluating and reevaluating, and is consistently changing based on these steps.

Many of the changes to a company’s safety culture will be based on trial and error within your own organization, while others will be necessitated by the ever-changing government regulations and policies. In fact, Employee Safety and Health Compliance (ESH) has evolved into one of the most complex compliance issues for businesses, meaning many HR departments are unable to keep up with the new regulations, causing many companies to be fined and penalized for policies they aren’t even aware of.

Due to this need for constant evaluation and the complexity of government regulations, many companies are now turning to PEOs for help maintaining their safety culture. PEOs are staffed with certified risk management specialists who can help oversee and ensure that you are compliant with safety and health regulations. These experts will even come on-site to see where safety measures can be implemented and what is lacking in your current safety culture. As an added benefit, many PEO clients receive decreases in their workers compensation insurance modifiers as a result of these services being provided by their PEO.

To find out more about how a PEO can help you with your safety culture and compliance, contact ARC Consultants today.